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Source link: http://archive.mises.org/14144/are-the-austrians-too-harsh/

Are the Austrians Too Harsh?

October 5, 2010 by

Austrians get a bum rap for their prescription for recession. The readjustment process is not cruel; it is about permitting production to align more closely with consumer preferences. Recovery, like growth and development, requires forward-looking planning. FULL ARTICLE by John P. Cochran

{ 56 comments }

Bogart October 5, 2010 at 8:46 am

Doing what Japan did in the 1990s and expecting different results. That is not harsh, it is insanity that will result predictably in stagnation.

Hayekian October 6, 2010 at 4:03 pm

ever heard of intervention in complex systems?ever heard of non-linear math and physics? ever heard of machines that are non-trivial? in all of these cases it is very sane, indeed it is the most probable thing, to expect different results to the same inputs/interventions.
Thus, it is not at all “insanity” to expect a recovery if they do the same things japan did. The reason is that the economy is a complex open system – the austrians like mises and hayek found that out too.

Jordan Viray October 6, 2010 at 7:30 pm

Well, “Hayekian”, Bogart is referring to Japanese government policy of propping up failed banks under the idea that they were “too big to fail” and prevented the “destruction” part of “creative destruction” necessary for economic improvement.

It is absolutely insane to think that the Bank of Japan’s low interest rates could somehow NOT cause malinvestment and retard recovery in the Japanese economy. Now Japanese debt to GDP is approaching 200% thanks to constant government stimulus and bailout. If we do the same, we will incur the same results of slow recovery, structural malinvestment and ever increasing debt.

I’ll assume your moniker is in jest since your thinking does not even remotely approximate Hayek.

Hayekian October 7, 2010 at 1:25 am

Hey, of course my comment was a little “harsh” ;) but nonetheless i mean it serious. Of course, hayek was a defender of ABCT but later in his life he learned that a single cause explaination might not be sufficient. I agree that inflation politics is most probably leading to malinvestment. but the question whether or not the economy recovers does not solely depend on that variable.
The world is just not like that: it is not linear, simple, one-cause-explainable and not predictable (the latter we austrian doom-preachers should know by now… for how long do we preach the end days of the monetary system?) ron paul since 1970ies. We were dead wrong about timing, because we didn’t incorporate hayek’s late work, which made him a lot more humble. And those works indeed reflect what i said above. It is a pity that you seem to know only hayek’s early writings

Kind regards

Jordan Viray October 7, 2010 at 3:02 am

The idea that we somehow believe ABCT is the only explanation for malinvestment is a gross caricature. But what we do know is that “inflation politics” not only “probably” leads to malinvestment but that it must. And the world is just like that because this is a necessary consequence based on deduction from the axiom of human action.

The fact that ABCT proves such cycles are necessary in a fractional-reserve banking system does not mean we get precise predictions in the manner of mathematics based empiricist economics. There does not exist and cannot exist a formula to give the timing for the business cycle so your failure to predict the “timing” has no bearing on Austrian theory. It’s a pity you have such a confused understanding of the basis of the theory but thankfully there are plenty of good resources here to redress that.

F. Beard October 5, 2010 at 8:59 am

Yes, I am familiar with the Austrian arguments in favor of recessions but they are just too convenient. Since both inflation and deflation are consequences of the corrupt fractional reserve lending system then why is only inflation bad while deflation is supposedly good? In fact, both are bad.

Short term solution: Abolish fractional reserve lending and bailout the current victims of it (everyone) with a sufficient and equal distribution of new, legal tender fiat (United States Notes). Borrowers could pay down debts to current market prices and savers would be compensated for years of suppressed interest rates.

Long term solution: Separate government and private money supplies; let government fiat be legal tender for government debts only.

Debt forgiveness is Biblical (Deuteronomy 15, Leviticus 25) and that was commanded before FRL was invented. The need today is even greater.

Horst Muhlmann October 5, 2010 at 9:28 am

Of course, in practice, not many debts were actually forgiven.

If you are ten years away from a jubilee, you are not going to get a 30 year mortgage. The jubilee prevented the debt from building up in the first place.

F. Beard October 5, 2010 at 10:22 am

If you are ten years away from a jubilee, you are not going to get a 30 year mortgage Horst Muhlmann

The availability of credit from the government backed counterfeiting cartel (the banking system) is what has driven up the cost of of housing to begin with. It is unlikely a home would require 30 years of payments to acquire without the counterfeiting cartel.

And while we are on the subject of Biblical economics this:

Deuteronomy 23:19-20

Are there ways to do investment without borrowing and lending money? Yes, common stock is one possibility which shares wealth rather than loots it.

tlpalmer October 5, 2010 at 9:01 pm

RE: Deuteronomy 23:19-20.

Who is the brother and who is the stranger (KJV) in today’s world?

Also, if you are trying to follow the law of Moses are you following all or picking and choosing?

Inquisitor October 5, 2010 at 10:23 am

“Yes, I am familiar with the Austrian arguments in favor of recessions but they are just too convenient”

Because government “stimuli” aren’t?

F. Beard October 5, 2010 at 10:44 am

Government “stimuli” is an indirect and unjust effort to get money into the hands of debtors. Instead debtors should be DIRECTLY bailed out since they were driven into nonservicable debt by the government backed counterfeiting cartel.

But since savers were cheated too (suppressed interest rates on their savings) then an equal bailout should be given to them also.

Perhaps if people considered the MORAL aspects of the government backed counterfeiting cartel we would not be wandering in the dark searching for indirect, crude methods to achieve what simple justice would dictate. The Keynesians wish to stimulate and the Austrians wish to liquidate. Neither is just.

Jordan Viray October 5, 2010 at 6:09 pm

You say “instead debtors should be DIRECTLY bailed out since they were driven into nonservicable debt by the government backed counterfeiting cartel.”

and that “savers were cheated too (suppressed interest rates on their savings) an equal bailout should be given to them also.”

but where will the money come from to bail these people out?

Austrians don’t want liquidation for the sake of liquidation but rather want the natural process of the market to reallocate the misallocated resources caused by the boom. The Austrians wrote the book on how governments through interest rate manipulation cause these boom and bust cycles and how such cycles always hurt an economy.

Inasmuch as Austrians want an economy to flourish, they understand that if you are going to have this bad system of government-caused boom and bust cycles, you can at least minimize the damage by allowing the busts to happen naturally, i.e. sharply but quickly and without government intervention. It may seem an “indirect, crude method” but is superior to the direct, sophisticated methods economic planners advocate.

That was my take on the article anyway.

F. Beard October 5, 2010 at 7:03 pm

but where will the money come from to bail these people out? Jordan Viray

That’s easy, the United States Treasury can simply send everyone a check. The US Treasury is NOT limited in the amount of money it can spend. Bond sales and taxes are merely a means to control interest rates and inflation. Neither is a concern now because of the economic downturn.

Inflation might be a concern, I admit, which is why I also advocate the elimination of fractional reserve lending. If the economy can endure 30-1 leverage of credit to base money then it could certainly endure an increase of base money with reduced leverage to keep the money supply constant.

Inasmuch as Austrians want an economy to flourish, they understand that if you are going to have this bad system of government-caused boom and bust cycles, you can at least minimize the damage by allowing the busts to happen naturally, i.e. sharply but quickly and without government intervention. Jordan Viray

So I used to believe but it is too late for that isn’t it? The banks have been and are already being bailed out.

Jordan Viray October 6, 2010 at 2:44 am

“That’s easy, the United States Treasury can simply send everyone a check. ”

Yes, they could. But as you note: “Inflation might be a concern, I admit, which is why I also advocate the elimination of fractional reserve lending.”

So let’s take a look at both scenarios.

1) We still have fractional reserve banking and the Treasury bails out debtors. The people who took out equity on their homes went into debt. People who bought homes during the bubble went into debt. To bail these people out would cost several trillion dollars which would make the Bush/Obama bailouts look like sound monetary policy. Inflation would be not only inevitable but astronomical.

2) We get rid of fractional reserve banking and the Treasury bails out debtors. But how could the Treasury write trillions of dollars worth of checks in this case? It would need a proportional rise in specie to do this which is impossible under a gold standard and extremely inflationary using fiat money.

The only other way I can think of for the Treasury to write out these trillions of dollars worth of checks would be through debilitating levels of taxation.

Both inflation and taxes are theft and incompatible with justice; there really is no easy solution F. Beard. As long as we have a government that forces “legal tender” and fractional banking on its subjects, these boom and bust cycles will continue.

R.P. McCosker October 5, 2010 at 2:21 pm

F. Beard wrote:

“Short term solution: Abolish fractional reserve lending and bailout the current victims of it (everyone) with a sufficient and equal distribution of new, legal tender fiat (United States Notes). Borrowers could pay down debts to current market prices and savers would be compensated for years of suppressed interest rates.”

Setting aside the basic moral objection to your “[s]hort term solution” (i.e. it constitutes new acts of theft, something forbidden by the Talmud/”Old Testament” that you cite as informationally authoritative), this has the practical effect of motivating bad borrowing practices in the future, inasmuch as people will tend to operate on the assumption that, if things get too bad for borrowers and lenders, the government will bail them out (at the expense, of course, of the holders of the governmentally mandated “legal tender”). And so the government-created boom-and-bust cycle perpetuates.

(Even if the “current victims of it” were “everyone,” as you claim — and obviously “everyone” doesn’t apply to the Rockefeller family and the other big beneficiaries of the central banking system of exploitation — some would benefit a lot more than others, at the expense of the others. That’s theft.

Dick Fox October 5, 2010 at 10:24 am

John Cochran wrote:

What then would be the Austrian policy recommendations for today’s problems? First, according to Hayek and Rothbard, stop the credit creation and inflation. Then, per Hayek, prevent a secondary deflation. Further, remove all government impediments to effective entrepreneurial planning by avoiding protectionist measures and allowing prices and wages to adjust as needed to restore market equilibrium. Cut tax rates, as was done in the incomplete reforms of the 1980s and during the crisis of 2001–2003, and drastically reduce the government budget. To prevent future boom-bust episodes, reform the monetary system from the current government monopoly to a market-determined medium of exchange.

This is perhaps the best supply side economics solution I have read recently and it illustrates just how closely aligned supply side economics and Austrian economics are. Jude Wanniski quoted Mises as much, or more, as any other economicst in his supply side lessons. The problem with too many Austrians is that they are so taken with the monetarist ideas and monetary aspects of Austrian theory that they are locked into a deflationist mindset. Notice above that Cochran recognizes that Hayek’s second action (and Mises also I might add) is to prevent the deflation that accompanies the bust part of the cycle.

The reason that most see the Austrian solution as too harsh is because too may Austrians have moved away from Hayek and Mises here and have developed a Quantity Theory of Money approach seeing deflation as a cure for inflaiton. It is not.

Cochran’s solution rather than forcing a grand contraction during the bust phase will actually minimize the impact of the readjust of malinvestment. Cochran seems to almost be alone in pointing our the nonhomogenous nature of the bust and the fact that the malinvestiment often can become valid investments in a growing economy; sometimes a growing economy does not need to reallocate malinvested resources but simply grow into them. But as Cochran makes clear this can only be done when the government gets out of the way.

This is one of the best article I have read here. For those serious economists I also highly recommend his book with co-author Fred R. Glahe The Hayek-Keynes Debate: Lessons for Current Business Cycle Research.

Dave Albin October 6, 2010 at 9:18 am

I think that, for all the good things that come out of supply-side economics, the focus remains on how they stimulate tax revenue – and we all know what happens to new tax revenue. This is how the boom cycle restarts itself in many cases. Political figures are all too happy to fire up unsustainable programs, create irrelevant government jobs, etc. as the good times roll. So, it becomes tricky to determine how malinvestments somehow become valid.

Tim Kern October 5, 2010 at 10:39 am

“Instead of privatization, government is organizing takeovers and bailouts of private business in the automotive, health, and financial sectors. Many of these actions have been conducted in ways that violate contracts and the rule of law.”

Funny, how a government’s voiding contracts and ignoring other legal constraints can fill people with a sense of impending tyranny, and thus stifle investment (except in those failing businesses deemed “too big to fail,” where implied government guarantees encourage even greater malinvestment).

It’s nearly impossible to conceive a peacetime option that could do more damage to any hoped-for recovery. Since our rulers aren’t stupid, it makes me wonder why, precisely, they’re doing this. Does anyone dare to answer that?

Curt Howland October 5, 2010 at 11:48 am

“Since our rulers aren’t stupid, it makes me wonder why, precisely, they’re doing this. Does anyone dare to answer that?”

Those “rulers” aren’t stupid. They’re effecting a HUGE transfer of property ownership from mere “people” to institutions and individuals who are politically well connected.

There’s nothing “stupid” about that at all. Evil, however, is an excellent label. Diabolical might be even better.

Deefburger October 5, 2010 at 11:01 am

The solution and the problem are both already there in the law. The Dollar unit is the only form of financial “regulation” allowed to the government, and it is the only part of the enormous regulatory paradigm that is not being utilized. Title 12 of the civil code insists upon the one to one redemption of the Fed notes for a fixed weight and purity of silver, the U.S. Silver dollar.

Closing the gold window did not close the door on a standard. That happened because the standard itself was forgotten, not “regulated” away. The insanity is the continued measurement of human value in “units” of notes with no redeemable value.

The economic system suffered first by the insertion of the central bank into every conceivable transaction. The current recession came about because the economy itself, all of us, forgot how to even measure the transactions being facilitated by the bank that must be utilized in every transaction. It was our quest for convenience, rather than truthful and honest measurement that got us here.

We can blame Keynesian-ism for the insertion of the bank. But we cannot blame them for our own lack of a standard unit of value measurement. That never left the system.

Read the civil code yourselves. One Federal Reserve Note is tied, one to one, with the standard weight of silver. Yet, all of the studies published use the floating note as the unit of measure, including those by Austrian economists. Shame on us all for not consistently conducting our studies with a consistent unit.

How much value does the number 2 trillion represent? What do you compare it to in order to know? I can tell you right now with measured certainty that it is an un-worldly number. There is not enough silver on planet Earth to redeem that number at a ratio of 1:1.

Here is a rough chart with the source of data being the USGS: https://spreadsheets.google.com/pub?key=0AjLmZDNLefUndGlaU1JpR01HdUFPVzVhRHd0Y1V5Q1E&hl=en&output=html

If the value of 2 Trillion cannot be met by silver or gold, and it only represents a fraction of the total value of debt, then where does the rest of the value come from? Labor and personal property, that’s where. We are stuck here on a planet and that limits our reach. Micro, meet macro!

F. Beard October 5, 2010 at 3:55 pm

And so the government-created boom-and-bust cycle perpetuates. R.P.

What part of “abolishing fractional reserve lending” don’t you get?

… some would benefit a lot more than others, at the expense of the others. That’s theft.

Actually, I had a more elegant solution which is to run the fractional reserve looting mechanism BACKWARDS. That would more accurately compensate the victims. But an equal distribution of new legal tender fiat to every adult is simpler and good enough. A twofold compensation for theft is the MINIMUM specified in Scripture. How about a SEVEN-FOLD compensation instead which is also in Scripture?

And let’s not talk of theft. Debt forgiveness is Biblical and COMMANDED. Do you think for one moment that Moses or Jesus would not condemn the present system of government backed theft of purchasing power? Do you think either of them would approve of evictions of families for the sake of the government backed counterfeiting cartel?

And actually, I advocate fundamental reform of our money system in addition to a bailout of the victims of the current system.

Pick Austrians, between Mises and Moses. How can you condemn fractional reserve lending and yet have no better solution than economic depression to sort things out?! Shame on you.

BioTube October 5, 2010 at 7:29 pm

“Depression” is millions of individuals working to sort out a problem caused by those with a “solution”; claiming you know better than them puts you in the same position as those that caused everything to begin with.

Inquisitor October 5, 2010 at 8:23 pm

I pick Mises.

tlpalmer October 5, 2010 at 9:29 pm

It would seem that Jesus would be more concerned about what was in the hearts of his people, which is worship of government, acceptance of theft, love of murder (war), etc. The people’s worship of the government is a larger problem than the government.

I would look to Isaiah and Jeremiah concerning how God felt about those that had turned away from him.

Jordan Viray October 6, 2010 at 4:39 am

Errr … I’m not Jewish. Nor am I in Israel where the Mosaic Jubilee year is meant to apply. I’m also 98% sure it isn’t a Jubilee year either, so yeah. I don’t know what impression you get of Austrians but it’s probably the loudest critic of government involvement in the economy so voice your complaint elsewhere. Do you really think any of us desired families to be evicted? Or that we support the Fed? Certainly not. It is kind of funny that your are hurling your invective at the ONE economic school of thought that wants to abolish the Fed and predicted this would happen. Well, it’s actually kind of sad now that I think about it.

But reverse fractional banking is an intriguing idea. Raising the reserve percentage requirements over time until it is 100% would probably be more palatable to a typical American than abolishing fractional reserve banking altogether. I’m not sure what the ramifications would be but it might not matter unless you could stop the printing presses.

J. Murray October 6, 2010 at 6:14 am

Show me the passage where Jesus raised armies and forced economic redistribution at the tip of a spear and I’ll stop calling you a part-time Christian.

Ohhh Henry October 5, 2010 at 5:35 pm

The reason that most see the Austrian solution as too harsh is because too may Austrians have moved away from Hayek and Mises here and have developed a Quantity Theory of Money approach seeing deflation as a cure for inflaiton. It is not.

Let me summarize the Austrian argument because I don’t think what you have said is even remotely accurate. Austrians believe that when a market is dominated by threats of legal violence that it increases the general level of poverty. This happens because the violent individuals (a) have no idea what actions would benefit the general population, and (b) have no motivation to benefit anyone other than themselves anyways. It happens that one of the hallmarks of an unfree market is inflation. It is thus, because inflation happens to be a very easy and convenient way of robbing people for a long time without their being aware of it.

Austrians are not hung up on inflation (or deflation). They’re only pointing out the obvious lesson from history that, whenever someone has violent control of the markets they almost always use their power to steal from other people through debasement of the currency. Monetary inflation causes price inflation, which is unequal and highly skewed towards the benefit of the elite who control the police and army which protect their legal currency monopoly. When people are ripped off long enough, even if they never heard of Austrian or Keynesian economics, they naturally react by ceasing their unprofitable activities. That is why the overall level of wealth falls even as prices rise.

Austrians do not prescribe deflation, they merely point out that when assets have been wildly overpriced due to inflation, there is an inevitable period in which the overinflated prices return to something closer their true value. Deflation is not a “cure” for anything, but it is a good indication, after a bout of rampant inflation, that a sick economy is being healed. Like a tree falling in the forest, artificially inflated prices will *always* crash whether Austrians or Keynesians or whether you or your grandmother are there to either moan over it or gloat over it.

F. Beard October 5, 2010 at 7:22 pm

Deflation is not a “cure” for anything, but it is a good indication, after a bout of rampant inflation, that a sick economy is being healed. Henry

Not so. Ideally a money supply should grow at just slightly less than the rate of real economic growth in the economy. That way none are cheated by price inflation or rewarded for risk-free hoarding. That is a far cry from our current elastic money supply which is created from nothing as loans are made (boom) and goes back to nothing as loans are repaid (bust).

But what is the real economic growth rate? That is difficult to measure and opinions vary so liberty in money creation must be allowed to suit all.

Inquisitor October 5, 2010 at 8:43 pm

Why must it “grow” when deflation can simply be factored into loans etc.?

Russ the Apostate October 5, 2010 at 9:09 pm

If I understand the logic of “anti-deflationists”, since deflation will increase the propensity to save rather than spend, deflation will cause money to be removed from the economy, leading to more deflation, and thus a deflationary spiral where nothing much is spent unless absolutely necessary, which puts a damper on the economy. Thus, the way to prevent this spiral is to stay just enough on the inflationary side of zero to insure that no deflation occurs to kick off the downward spiral.

A better objection to deflation, AFAICT, is this: if inflation disproportionately hurts those who are owed money and helps those who owe money, then it would seem logical, on the face of it, that deflation disproportionately helps debtees at the expense of debtors. Either way, you have a redistribution of wealth due to the changing value of money over time. And deflationary redistribution would tend to be from the poorer elements of society to the banks. This could be factored into loans, if it is predictable, but not if it is not.

Anybody who’s not an economic ignoramus (which I am), who cares to correct me on this, feel free.

Jordan Viray October 6, 2010 at 3:57 am

You’ve probably picked the best argument against deflation in that people currently in debt would have a harder time repaying their loans. But let’s take a look at what might happen in such a scenario:

Let’s say Alice decides to take out a loan in an inflationary environment and the bank, considering her risk and the returns it might get from other investments, calculates a rate of 5%. If inflation is also 5%, then the bank loan will be at least 10%. Now if deflation is occurring, that inflation premium will disappear so the interest rate for Alice would be around 5%. She just needs to borrow at the better rates and pay off her old loan.

The caveat is that Alice needs to be able to get that lower interest loan which is less likely in a deflationary environment based on deleveraging where banks are not lending in order to repair their balance sheets as opposed to the sort of deflationary environment that would be expected with sound money and increasing productivity.

J. Murray October 6, 2010 at 6:20 am

Deflation isn’t happening becuase money isn’t being physically removed from the system. Taking a dollar bill and burning it causes deflation. Holding it for later use doesn’t.

You have to separate inflation and deflation – a function of the quantity of money in circulation, used or saved – from the value of the money itself as a medium of transaction.

All we need to do is look at the period from 1873-1900 to fully and completely discredit the deflationary spiral concept. Or look at the computer hardware industry. Or consumer electronics. Or a broad variety of other things in society that have gotten cheaper, rapidly, year after year and have done nothing but sell more and more, not less and less as people somehow get stuck in this imaginary cycle. During all of these phenomenon, there is “deflation” as defined by Kenesian economics, yet prosperity increased almost across the board in 1873-1900 and computers and consumer electroincs are more ubiquitous than ever. Falling prices are GOOD. So long as the money isn’t being forcibly removed from the system and destroyed by a central bank to cause the falling prices. That’s just a different sort of distortion.

A deflationary catch-22 is a fantasy created by John Keynes that was not based on anything that has ever happened before or since. At no point in history has a deflationary period led to perpetual depression.

Jordan Viray October 6, 2010 at 3:17 pm

“Deflation isn’t happening becuase money isn’t being physically removed from the system. Taking a dollar bill and burning it causes deflation. Holding it for later use doesn’t.”

That is incorrect. You don’t need to physically remove money from the system i.e. “taking a dollar bill and burning it” to cause deflation. Increasing the reserve requirement or bank insolvency from bad loans will do the same and the latter is not a case of money “being forcibly removed from the system and destroyed by a central bank”.

Ohhh Henry October 5, 2010 at 5:39 pm

Is it just me, or does anyone else notice a lot of new commenters popping up here at m dot org?

That’s a good sign. Their old gods have failed. They will learn that there are no gods of economics, only human actors.

Bruce Koerber October 5, 2010 at 6:37 pm

Is The Economic Solution Of Austrian Economics And Laissez-Faire Too Harsh?

This is the same as the old question: “Is laissez-faire too harsh?”

Not only has Austrian economics answered this question but it has opened the understanding of capital and money to anyone who is trying to understand laissez-faire.

Why won’t the media ask the question about laissez-faire anymore? It is inconceivable to imagine a world without the State, especially to the State-subservient media and the propagandized populace.

Guess what, that is what education is supposed to do: rid humanity of its ignorance.

F. Beard October 5, 2010 at 7:25 pm

laissez-faire?! What part of a government backed banking cartel in a government enforced monopoly money supply sounds like “laissez-faire”?

Or is laissez-faire only for the government backed counterfeiting cartel and its friends?

Bruce Koerber October 5, 2010 at 10:05 pm

F. Beard,
I don’t understand your question.

F. Beard October 6, 2010 at 4:19 pm

Bankers, hypocrites that they are, are all in favor of laissez-faire as long as their government backed cartel is spared. They howl about “money printing” when every day they leverage 20 or 30 to 1 to create money (credit).

Price October 6, 2010 at 4:02 am

What would be the ethical response of a homeowner/mortgagee who had just received a letter from his bank asking for his help in documenting the note?
It is looking increasingly more likely that without the mortgagee’s help in providing documentation, the note will be wiped out, along with the corresponding collateralized debt obligation security that the note is supporting.

Walt D. October 7, 2010 at 6:27 pm

In California – check with the County Recorders Office.

F. Beard October 6, 2010 at 4:00 pm

Speaking of Jeremiah, the city of Jerusalem could have avoided destruction if it had not reneged on its freeing of Hebrew debt slaves:

Jeremiah 34:8-22

The US has a lot to be forgiven of including its senseless wars but also that it has allowed its population to be driven into debt slavery. Everyone knows that excessive debt is the problem. Then why not address it directly?

Disclosure: I have no debt. However, a healthy US economy is in my interest.

F. Beard October 6, 2010 at 4:16 pm

I pick Mises. Inquisitor

These are interesting days. I predict that the whole concept of lending money at interest (usury) will be discredited. It’s too bad that Mises with his brilliant mind apparently did not consider what a fellow Hebrew taught 3000 years ago:

Deuteronomy 23:19-20

Bala January 3, 2011 at 11:07 am

I’ve been wanting to ask this for a long time, but what exactly is wrong with lending money at interest? How do we account for time preference if we eliminate interest?

How do you plan to account for us (I am assuming there are others like me) atheists who do not consider religious texts as a source of wisdom?

Jordan Viray January 3, 2011 at 2:15 pm

We can revert to the bad old days when the Medievals, wanting to avoid interest, would tack on insurance/transport/”late” fees when they lent money. The old arguments against interest (usury) have been thoroughly debunked but the inertia of the initial prohibitions still influences ultraconservatives today.

Leon Haller October 7, 2010 at 10:11 pm

Let me reduce everything to the simplest denominator: Liberty. Liberty is not the greatest political good to me, but I will make it so here for argument’s sake. A bunch of morons (there is no other word, excepting ‘lunatics’) known as libertarians actually think that there is something inimical to freedom in regulating immigration. They are especially horrified when I recommend that we KEEP OUT ALL non-white immigrants (that in itself proves a leftist psychological orientation).

So let’s be simple. Obama is the single greatest threat to both economic prosperity and the long term survival of liberty in the US perhaps in US history. He is undeniably the furthest socialist/Left President. Who elected him (and no, I did not vote for the nearly as awful McCain; I wrote in Ron Paul)? BO’s electoral margin of victory was provided by post-1965 immigrants and their adult descendants (aka “minorities”). If we had had zero immigration since 1965 McCain would be President – and the Congress would be permanently GOP.

The ONLY racial group in America who even slightly supports liberty is whites. This is a fact (I hope no one here denies it, because then the debate is over, and I will have won). Party ID is a rough proxy for gauging commitment to liberty understood to be rooted in property rights (the Rothbard position). EVERY minority group is heavily Democratic, in ID and actual voting. Disappointing as the GOP invariably is, the Democrats today are pure evil (even from a libertarian perspective). So why do idiot libertarians want to increase Democrat numbers by admitting vast hordes of non-white immigrants??!! What insanity – to put ideology ahead or reality!!!!

Diversity is the health of the State. Idiot libertarians might come to understand this after whites have been transformed into a politically powerless minority, one whose new non-white, non-American masters grant them precious little liberty at all.

REPLY

New Darky King in Waiting October 7, 2010 at 10:45 pm

When I inevitably take control of the USA, to be renamed the United States of Africans, I will have no need of white males and no intention of being your master. I do not believe that the white man has social equality with the darker races, nor will he ever attain it. Therefore, I will demand that all white males be returned to their native climes of Europe, where they will be more socially suited. But leave the white women. Dey iz hot!

mushindo October 11, 2010 at 2:35 am

@ Leon Haller:

Translation: ‘I want liberty, but only for me and people who think and look like me’.

Leon Haller January 3, 2011 at 12:13 pm

Not quite. I think liberty would be good for nonwhites, too. But I want those alien peoples to remain in their own countries, and not be allowed to invade and colonize mine.

Stephen Grossman January 3, 2011 at 10:32 am

>The ONLY racial group in America who even slightly supports liberty is whites.

As Mises stressed, coincidence is not cause. The Germans who supported attacks on liberty under Hitler were white. So what does that mean? And collectivism, whether economic, ethnic, racial, or whatever, is destructive. Man has free will and no innate ideas. Your appeal to race is evil, a rejection of mind for chemicals. You have reduced yourself to a collection of chemicals. Spiritually, youre not human.

Leon Haller January 3, 2011 at 11:07 am

Are you really this stupid?! Why don’t you address the claims I make above? I am very disappointed in both the low intellectual quality of the persons visiting this site, as well as in their leftist orientation. The older generations of libertarians were not in the least “anti-racist”.

nate-m January 3, 2011 at 11:40 am

When you say something as dim as this:
“”The ONLY racial group in America who even slightly supports liberty is whites.”"

Then it getting any sort of meaningful response is going to be very unlikely. How many Blacks, Asians or Mexicans have you talked to about ‘liberty’ or your political viewpoints? Probably not many (or any) or you wouldn’t of said anything you said. It’s really very stupid and ignorant statement.

“”Disappointing as the GOP invariably is, the Democrats today are pure evil (even from a libertarian perspective).”"

George Bush was every bit as ‘evil’ as Obama. The Republican and Democrats really are the same political movement nowadays. I really don’t see any discernible difference besides posturing. What one party stands for the other opposes as a rule, but they frequently swap positions.

Leon Haller January 3, 2011 at 12:12 pm

Again, the stupidity quotient is unbelievable! LOOK AT VOTING PATTERNS! LOOK AT SOCIOLOGICAL STUDIES OF IDEOLOGICAL AFFILIATION! ONLY whites support capitalism, limited government, low taxes, private property rights, gun rights, etc. If you are arguing against that statement, then you have lost your argument, as you do not know empirical reality. 96% of blacks think Obama is doing a good job – this as of Nov 1 of 2010. They approve of the work of the most Marxist president in history. What more needs to be said?

Let’s throw out a question. What is more important: preserving private property, or being PC (not being ‘racist’)?

Suppose I demonstrated that ALL nonwhite populations in the US support socialism by large majorities, but that whites opposed socialism by an equally large majority. Would you then agree that the cause of liberty in the US would be furthered if nonwhites could be persuaded to leave the country? Would you agree that liberty would be furthered by keeping additional nonwhites (immigrants) out of the country?

The free market in the US has declined directly in tandem with the increase of the nonwhite population – and, yes, that correlation is also causation. No Democrat president has won a majority of the white vote since 1964 – yet they have won titanic majorities of ALL nonwhite groups (including Jews, Grossman – your people supported the Marxist Muslim by 78% – unconscionable!).

I am really shocked at how leftist-brainwashed you people are. Really. I’ve always had a low opinion of libertarians, but the older generation, like Rand (a thoroughgoing white supremacist), Rothbard and Ron Paul, were not in the least ‘touchy’ about acknowledging racial truths. Read some of Ron Paul’s old Reports if you don’t believe me (I have a bunch in hard copy, and I think I should scan them all and post them publicly, just to make sure there is no weaseling about being a libertarian means one has to be against ‘racism’; the one has nothing to do with the other).

Stephen Grossman January 3, 2011 at 3:13 pm

>Rand (a thoroughgoing white supremacist)

America is basically rational, not basically a race.

Stephen Grossman January 3, 2011 at 11:52 am

>Why don’t you address the claims I make above?

Your basic claim is racism, which I addressed and refuted. You may correlate ideas and race as much as you please but you will never find causality because you evade the method of finding causality, man’s mind.

Stephen Grossman January 3, 2011 at 2:18 pm

Ideas come from philosophy, not ethnic groups.

Bala January 3, 2011 at 11:04 am

Good joke. I only hope you thought you were joking.

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